Lease vs Buy: 6 years to benefit from buying?

Ask the Hackrs
21

How many B58 powered models come with air suspension?

I agree with you if you’re saying BMW turbo 6s got a bad rap starting with the N54 and that the newer ones shouldn’t be tainted by that association.

But there’s a ton that can go wrong even if the engine and turbo are fine. And some BMW N/A powertrains had been problematic long before their current turbo era. I also don’t see how money spent on powertrain parts replacement is any different from air suspension parts replacement.

Now if someone wants an E39/46/60/9x specifically because of how those cars handle I’m not going to tell them to look elsewhere. Those are fine cars that, in the right spec, arguably have no equal among their peers. But I’m also not going to recommend BMW to anyone looking generically for any used luxury car; they’d be much better served getting a Mercedes W212 with the 3.5L for example

Bottom line is knowing what you like and being able and willing to maintain it.

22

Quite a few. X5, X7, 5 series, 7 series. X7 and 7 comes with air suspension standard whereas the others are options. Recently BMWs are a lot more reliable than Mercedes. Also, air suspension wise, even a high end japanese car with air suspension would need the same replacement. Drive train is pretty solid with recent BMWs.

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The tough part for this conversation is no individual will ever have enough information to make a reliable inference when it comes to the vehicles in their household.

But, I am aware that the profit margins for extended warranties are well over 50%. Which means if someone pays $3,000 into an extended warranty to cover a vehicle from 37 months to 70 months and 36k miles to 70k miles, the extended warranty company has data to expect average costs to cover repairs on that particular vehicle will likely be around $1,500 on average.

But we all know vehicle repair costs vary wildly. If you get hit with repairs, it’ll be very expensive. But some people won’t see any issues, so they basically paid $3,000 for nothing. And of course some warranties won’t cover a tie rod or ball joint while others will, and it’s a giant headache for everybody to fight for every penny of coverage. Sucks for the car owner.

Anyway, for every 10 extended warranties sold, it’s likely 9 of them will incur very little covered costs during the period. While 1 person will see combined repair costs in excess of the $3k. The extended warranty business isn’t like insurance though. Insurance is highly regulated. Extended warranties can profit out the wazoo.

So these warranties are sold to prey on the fear you’ll be in the 1 out of 10. This also gives the marketing department examples of the 1/10 to put on their advertising about how smart it was to get the insurance. I guess the 9/10 got peace of mind which has an intangible value.

I usually recommended people to “self insure” for car repairs if they aren’t leasing. If you think you’re in an unreliable BMW or Mercedes that will need $2,400 a year post-warranty repairs, then it’s reasonable to set aside $100 a month from the onset of the purchase so that you have a savings of $3,600 once the vehicle warranty ends. Then starting month 37, save $200 a month. Edit, yes I am aware that this savings will likely have an investment return and opportunity cost, but come on, that’s too complicated haha.

Sure, one cracked engine block will blow up your $3,600 savings, but the chance of a cracked engine block isn’t 100%. You’re also not facing a 100% chance of an air suspension issue in Year 4.

The extended warranty companies want you to think your chance is 100% though. Fear drives big profits.

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Yeah, that’s why I don’t get extended warranties anymore and just do more preventive maintenance instead. Repair costs are a lot cheaper at independent shop vs dealerships as well. Warranty is likely based on dealership repair costs. On average I save a lot more money vs extended warranty. In the case where I’m unlucky, I can afford the repair cost and will just take it.

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Yeah, it’s better to find a good shop than throw money at an extended warranty.

The experience of these Throttle House guys at the end of their recent LR4 video is basically everything I’ve ever expected of extended warranties. The warranty company will do everything they can to weasel out of paying a claim.

Everybody becomes some contract-lawyer-expert at the most inopportune times.

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Average is bit of strange concept here. It depends on each car…

I have no idea how you average my Leaf I’ve had for 21 months at $125pm and not I got Arya at $230pm. Leaf was $30k MSRP and Arya is $50k MSPR. And I know they all have Fed rebate of $7,500 but not everyone can take full advantage of that based on their taxes. So leasing for some if a way to capture EV rebates otherwise they could not get.

But on the other hand for as long as I’ve seen many Toyota models (excel for a period of everyone got a Taco and/or Tundra pre-covid) it’s better to finance than lease.

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Fear drives more human emotion than greed. There’s a reason they make the money they do.

28

Long story short…buy a Toyota

29

Does anyone ever execute a lease with the purpose of creating equity, outside of applying lease incentives before a buy out?

There are far too many variables to establish a benchmark for how long you’d need to own a specific vehicle before the cost of leasing exceeds the cost of ownership. Plus, most people don’t lease beyond 36 months.

If you’re doing it right, your lease hacks should be good enough that you’d never have to worry about coming out ahead if you were to finance a vehicle instead of leasing it. And after 2-3 years, you’re moving on to the next car and letting someone else play mental gymnastics about TCO for your lease return.

1 Like
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You are going to trigger some folks around here with that “never break the lease cycle” talk. BTW, I agree with you as if you doing right you are always going to have a payment but always have the cars you want via leasing.

In the first time in forever, we have three purchased vehicles at one time just because of the use case for each car/truck and leases were awful for all three at the time. We also have bought used and CPO, and also bought new and kept past 3 years and the warranty as well.

Generally speaking though, it is hack away for a lease then dump it and hack again.

31

Yeah, it just requires a lot more work versus finding one car and driving it into the ground. Plus, if I was shopping a car to own forever, it certainly wouldn’t be any of the cars I’ve leased or even remotely close to their MSRPs :laughing:

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I’ve used it before and it varies on the vehicles, incentives, etc; that I’m aware of. I use the effective monthly cost because I’m sure it reflects the more accurate ownership cost. Thanks

33

I used the LH calculator for a buddy wanting a new Taco and it was one of the few vehicles where financing was better.

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I think there are far more than a “few” vehicles out there where a purchase is “better” than a lease.

35

Was that during the great double :taco: time where Tacoma TRD Off-road with MSRP of $45k was leased for $250? With about the same DAS as monthly.

Because that’s the one I had. Oh, and it was stick shift😂 fun times

36

If some really wants a specific vehicle, purchasing might make sense depending on the vehicle. but lets says instead of tacoma, he accepts to settle for a Ram may be he might still be ahead. You have to consider the alternatives if the goal is do the financially better. If the goal is to get a certain ride, you are more limited.

37

Definitely depends on the vehicle. I would lease in this situation, since 2024 is the final year of the current S5 and Audi resale values tend to tank whenever a new generation comes out.

AFS’s lease residual of 64% is optimistic, especially when loaded up with options to a $70K MSRP. The money factor is also reasonable after MSDs. All point in favor of leasing.

Now if we were in 2018, where the S5 is a brand new design and there’s no lease support, this would be a different story.

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